Google lost its first antitrust case, so what happens next?

25:32And they looked at the check from Google, and they picked the check from Google. They took their own product that they had bought, and they're like, we could make this good. by putting it in front of more people and getting that clickstream data and making the search engine better. Or we could just take Google's money. And Google's like, what if it was more money? And then Verizon caved and they flipped Yahoo. And you're like, well, why didn't anyone ever try with Yahoo? It's because Google just made sure it couldn't get the distribution. Also very virtuous, one of my favorite parts of this whole decision, there's a lengthy conversation about bloatware and Android phones.

26:06And I don't know if I believe this, but there's all this evidence that people won't accept three browsers on their phones or three search widgets, but they will take two because Samsung has two, right? So there's like internal Google emails and evidence and like meeting notes where they're like, we're not so worried that our deal with Samsung for distribution, where there's our browser and Samsung's browser is under threat from Microsoft because no one would ever accept three browsers. And it's like, I don't know, man. I feel like Samsung is like one minute away from doing three browsers. Samsung is 100%.

26:43Samsung is going to do like four different browsers. Yeah, it's like we're very close. And like no one, they're like absolutely not. Two search widgets on the home screen? Heaven forbid. And it's like, I don't know, have you met these carriers? Yeah. Like if not for your exclusivity contracts, like they would put two search widgets on the home screen. Like they're minutes away from doing this. They just forgot bloatware. They just like forgot how bloaty phones were before Apple. There's a lengthy discussion of bloatware in this decision and how Google sort of like used the threat of bloatware to make sure they were an exclusive provider of search on these devices.

27:15And you just see it up and down the stack. They find their angles to make sure there isn't competition and they press their advantage on those angles. And to me, it's, well, that's why we don't have other search engines. Like there's Bing and Bing just isn't good enough. And like the judge basically says Bing isn't good enough. If Apple maybe has required to say it says Bing isn't good enough, Google is out there running benchmarks saying Bing isn't good enough and then sort of knowingly making their product worse. And it's fine. What was the number? There was one number in the decision that was like it would take Bing 17 years to get the same amount of click data that Google gets in a day or something.

27:53So basically, in this opinion, the judge says that 13 months of user data acquired by Google is equivalent to over 17 years of data on Bing. Right. And that's like the amount of use Google gets in 13 months is it would take Bing 17 years. And all of that feeds back into the ranking model. It's like a really interesting thing in this opinion is the stuff he dismisses. Right. He says TikTok is not a competitor to Google search. And then he's like, I know you all want me to talk about AI and how AI might dethrone Google search, but we're not there yet. It hasn't happened yet. I don't see it. And I've got all this evidence and testimony from Google's own people saying they need the user data even when they try the AI tools.

28:39Even when Google puts its AI models up to make the search results, it's the click data that actually helps them refine the search. They need the feedback loop, right? Yeah. And this is what I hear talking to like Meta and other companies. Like they really think that the people who win at large scale network effects businesses like this just have the feedback loop and AI search. If it just gives you the answer, uh, you're not learning a lot about is the answer good? Um, how can we improve it? Because you don't have an interface where people are browsing, clicking the links, going from pages. And yeah, it's smart of Google.

29:16They recognized early that Search was a network effects business, an aggregator business, and they went out and bought all kinds of distribution. They did Android purely to get Google Search out there on phones. They realized they didn't own a phone, so they bought an OS and scaled it and did all these funny business deals to basically bundle. And this is a tale as old as time. I mean, Microsoft will get into this. I'm sure Microsoft 20 years ago got its hand slapped by the DOJ for doing almost the exact same thing. And the characters that come up in this case have a fascinating background in that case.

29:58Like Kent Walker, who's running legal at Google, was the general counsel for Netscape during the Microsoft antitrust trial. Like he understands, like he understands bundling and what it does to the smaller players. You can't see this if you're listening to this, but I'm wearing a Microsoft logo shirt from the early 2000s in honor of this. So, yeah, I just find it interesting that like if you look back at the last time a case like this was brought was Microsoft and Microsoft was so dominant, so ascendant. And the question was, will Microsoft control the consumer and point to the Internet? Right.

30:33And now, 20 years later, as a result of that decision, Microsoft didn't get broken up, but it changed a lot as a result. We've got Eddie Q in court saying, you couldn't give me all of Microsoft to use Bing. And it's like, what does that mean for Google in 20 years? That's what these cases do, and this is why it's such a big deal long term. So this is what Cantor said to me on Decoder. Again, I won't get too into the weeds on legal stuff, but his takeaway, his big consumer-y takeaway was, this case is a continuation of the Microsoft case. The opinion itself, the judge, makes endless references to the Microsoft opinion.

31:08He says, I'm using the same analytical framework as the Microsoft case. And Cantor's point to me was, that case was about the application model moving from Windows to the web, which it definitely did. Now, whether or not you want to ascribe that to antitrust action or not, a lot of people have a lot of arguments. But a thing that really happened is, we run apps and web browsers now, and not natively on Intel processors on Windows. We just run web apps. We're making this podcast in a web app right now, a very cranky web app, I would add, that only runs in Chrome. There's your antitrust problem.

31:43But the application model moved to the web. It allowed a company like Google to exist because Microsoft wasn't able to bundle Internet Explorer and force out other browsers. So you had browser competition, which meant you had application model competition, on and on and on, and now you get to Google. And now the government has cases against not only Google, but also Apple, basically alleging the same thing. And Cantor's like, we have to make sure the next generation of applications is allowed to exist. And it's these moments when everyone can see the change that the incumbents try to crush the insurgent models.

32:14And his point is, Google is trying to do that potentially with AI search. They see it coming, so they're trying to lock down their advantage and make sure no one else gets distribution and they can capture that market. And he thinks Apple is trying to do that on the iPhone too. I don't know if they're going to win the Apple case, but that's sort of his theory of the situation is a direct continuation for Microsoft. The Microsoft case is generally interesting because, you know, it's been 20, they started that investigation in 1990 and they reached resolution in what, 2001? So that took a long time.

32:45And, you know, Bill Gates is out there being like, yeah, that distracted me so I didn't do smartphones. And it's like, yeah, like that's one way of thinking about it, but you also made Windows phone, which was bad. That's what he likes to say. Like, he's just like, it distracted me. It's like, no, it didn't distract you that much because you made a phone. You just made a crummy phone and you don't want people to talk about it. Well, it makes these companies, especially at this scale, just super skittish. Right. And I do think there is an argument that Microsoft missed the mobile wave and didn't do it right because it was skittish, because it was on its back foot.

33:19It was subsumed by litigation and regulatory response internally. And it's hard to not see that maybe playing out with Google here. And you can see Google already reacting this way in that like the way that they fake bought at Character AI last week, for example, which is totally wild. It came out after the Vergecast last week. I'll just quickly recap it. They basically bought this AI company without doing it, and they paid all the investors and the employees as if they bought the company, but they only took the AI people and are leaving the husk, the flaming husk of what they left behind and saying good luck.

33:57But not an M &A event because they didn't buy equity. Um, but they're doing deals like this because they already feel this antitrust scrutiny and they're not able to take the kind of big swings that they took to get to where they are now, which is buying YouTube, buying double click, buying these things that fortified their monopoly. Um, and there's a really strong argument to be made that in the same way, this kept Microsoft from being able to be so aggressive in the early two thousands, that could happen again with Google here. okay but here's a counter argument to that microsoft was distracted and lost in compliance efforts and i don't bill gate was drinking tequila and screaming at the moon about the department of justice or whatever he was doing instead of inventing the iphone jumping over do you believe that fine maybe you believe that's 100 true uh google exists apple was allowed to be resurgent because they put out the imac with the web browser on it like The iMac running OS 9 when it came out was not like there's a suite of great OS 9 applications for the Mac.

35:02It was this is the computer it's easiest to get on the web with. That's how they marketed it. Because the web was the application environment. It was the thing everybody wanted. It wasn't a bunch of weird Intel CD-ROM Windows applications or whatever was happening before. And Carta was not the thing, right? It was the web. And that worked. like here we are in 2024 and we're like Apple and Google are dominant companies because Microsoft was forced or coerced or distracted away from foreclosing that competition. And it's pretty hard. Like you can look at that in hindsight. And I promise you a bunch of old head VCs and investors will like, and ex-Microsoft executives in particular will litigate and relitigate whether it actually happened or whether Apple was just better or whatever.

35:50But it is true that Microsoft was turned away and the web was allowed to be dominant and the dominance of the web is what enabled the iMac to be successful and now we're here with the iPhone, right? Like, that's the line. Yeah, I think that's what a lot of advocates for antitrust enforcement would say is just like, yeah, maybe, you know, with Microsoft, we saw Microsoft bog down in its legal woes for a while. But, you know, what would have been a bad outcome was like never getting the rise of Apple and Google in the first place, never getting those products. Not that Microsoft wasn't the one to invent those.

36:25And also Microsoft is doing just fine. They figured it out. Yeah, right. Like it forced them to be competitive. It forced them to think. That's why they invested in Azure. And they built up this huge cloud computing business. Yeah, Microsoft is like, I want to make a dance. He's having a good time in his life. Like competition is in fact good. And when these companies get so big that they don't compete, we do see things like this. And I'm not just saying that because I just bought a car with Google inside and it's hot garbage. And I can really feel how their monopoly is affecting me personally.

36:59But you do feel it. Oh, you feel it. Oh, you feel it. Google's stock price in the last five years is up 177%. Do we feel like search has gotten 177 % better in the last five years? It's actually – No, they've just canceled 177 % of their products. That's all they've done. They've just end of life 177 % of the things they invented. But I think this is the part that's really hard. And I, you know, you couldn't have guaranteed in 2001 that Apple would be resurgent or that Google would come to be dominant on the web, that they're dominant. And I think it's really hard to sit here in 2024 and predict that OpenAI will now have a chance to become the next Google.

37:40OpenAI, which I will remind everyone, Microsoft owns 51%. 49. 49. 49. You can't predict that TikTok will actually turn into a search engine because it has some designs and larger search applications that might get banned. There might be some startup that next year is going to take off and grow at the scale. It's really hard to make the forward-looking argument, especially when we don't know what the remedy is going to be. Right. If the government shows up and says, break up Google. And the only way to fix this is to break up YouTube and Google. And the first thing YouTube is going to do is build a general search engine because it's obvious that that's they should do.

38:23And the first thing newly broken up Google will do is build a video platform because like, sure. But is that what they're going to ask for? We don't know. Lauren, yeah, I was going to ask Lauren this. Do we think the DOJ actually wants to break up Google? I think they actually just want Google to not be able to spend$30 billion a year buying their distribution. I mean, I think the strongest signal we have is just the statements from Cantor himself about how he thinks about remedies generally. And that's that he prefers structural remedies, a.k.a. breakups. And so I think how sweeping will that structural remedy be that they ask for?

39:01I don't know. But and, you know, will they is there a chance that they decide it's better to go with a behavioral remedy, a.k.a. like ask them to stop doing something, ask them to stop putting certain terms in their contracts? Maybe they think that's more appropriate in this case. But I think we have to seriously consider that, you know, this structural remedies are something that Jonathan Cantor tends to like. Yeah, sure. I guess my point is like negotiating one-on-one is you always ask for more than you know you're going to get. I think they will - Give me the whole company. Give me all of Microsoft.

39:35They will obviously ask to break up Google. I think in Cantor's heart of hearts, he would actually be okay if all that came out of this case was what happened in the Microsoft case, which is the government went for a breakup. They didn't get it. But Microsoft was foreclosed from doing these bundling anti-competitive contracts for distribution. I have to think the DOJ would be happy with that. And that would be just as, I think, impactful on all of tech if Google just can't buy out its distribution. But would it? Yeah, I think so. Because I think if you think about, OK, how do they do that? How do they change that?

40:12Well, then first thing, how do you change it on the iPhone? How do you change what that default is? Because there's always a default. Well, so inside of that question, I think, is a very weird thing. So inside of that question, I think, is a hard problem to grapple with, which is right now Apple collects$20 billion here from Google. If it can no longer collect that money, will it spend money to make its own search product? It's not spending it on Bing. Right? Yeah, it's not going to take the money from Bing. As we know, at EQ, there's no sum. It's unbuyable. integrity is unimpeachable by Bing specifically.

40:51But, you know, Cantor told me that he thinks the AI turn is a big inflection point. And he wants the remedy to be forward looking. He's like, I can't fix 15 years of anti-competitive behavior. I need to make it so the future has competition in it. So if you prevent the money, if you prevent the$20 billion from going to Apple, does Apple invest more in Apple intelligence? Does it start answering more questions directly? Does it make, you know, right now it's OpenAI is the sort of general search product built into Apple intelligence, but we know they're going to make a deal with Google too. Maybe there's more choices there, right?

41:25And like Apple's going to more providers. And you can see like maybe that creates a different outcome. Like for me, it's like, is it going to make Siri better? I think we're underestimating the power of money and the power of when you're, so yes, it's 20 billion, but it's actually. More than that, it's a meaningful percent of Apple's profit margin because the Google check is 100 % margin. So when you subtract the Google money, Apple services business, which is the narrative for the future growth of the stock that Tim Cook has been spending for 10 years, collapsed by a quarter. It's significant.

42:01And I think we're underestimating the just capitalistic inherent drivers here of when you are not getting a check to not do something anymore, you may go do that thing. And for the last 10 years, Apple has been getting paid an ungodly amount of money to just don't look over there. Yeah. Just to end on this, we've talked a lot about the decision and the mechanics of Apple and what might happen next. Heath, you're sourced inside all these companies. What's the vibe inside of Google right now? Are they afraid? Are they worried? Are they watching their stock price? What's happening? They're always watching the stock price.

42:38I think that what will really start to change things is when we get closer into this remedy phase and there's an actual sense of is it a breakup? Is it Apple can no longer, you know, just be our default? Do we have to like make this a fair playing field? We have to open up our distribution lanes. We can't bundle Android and search. When that stuff starts becoming more concretely explained, which Lauren, correct me if I'm wrong, but it sounds like will be this fall. This is happening pretty soon, right? So I would say by this fall, what will happen if the Microsoft case is any indication is there will be a ton of scrambling inside Google.

43:20There will be a whole division spun up to address this, whatever structural changes they need to make should they lose this on appeal. and it's going to be messy because it's hard to, I've been thinking about this, like who does this hurt more in the short term, Apple or Google? Because Apple gets the money, which will hurt its stock price, but Google's not going to have its distribution, which will also hurt its stock price. I have to think that Apple already has the scenarios mapped doubt of what it will do should it lose this case. The vibe I've gotten inside Google is that they've actually been kind of gritting their teeth and just praying that this won't happen, which was the Microsoft approach 20 years ago.

44:05Microsoft had other businesses, though. Google does, too. Like Google Cloud is huge, like Google and not huge compared to search. I think YouTube and Google Cloud together are as big as Search, if not bigger. Nila, you don't think the Pixel is going to come around? XR is about to blow us all away. I'm just saying, Google has all of its eggs are in this basket. Well, all of its eggs are in Gemini. And I think we saw this this week with Gemini in the new Nest lineup, right? They are putting Gemini everywhere. I thought it was really interesting how we were at I.O. and Gemini was such a big part of the Pixel Android experience.

44:45and it's only going to be on Pixel. I think they really are betting on Gemini being the thing that kind of makes them something that consumers willingly pick again because they didn't have to worry about this for the last 10 years with search. And Gemini for them has to work as a thing that makes people interested in Google as an actual innovator again. And I think that is their big bet to survive this change should they lose the Apple deal. Yeah. All right. We'll see. Again, we're not at the remedies phase yet. if you want to read all 286 pages of the opinion, it's, we'll put a link in the show notes.

45:21And if you want a deep dive onto like the legal mechanics of it, we'll link to that episode of Dakota where Sean can't her. Cause he, we got very nerdy. And at one point, I think he was like, what are you doing? Stop it. But we'll link all that in the show notes. We got to take a break. We're, we're, we're well on our way to going over already. We'll be right back. If you're tired of database limitations, and architectures that break when you scale, then it's time to think outside rows and columns. MongoDB is the database built for developers, by developers. It's asset compliant, enterprise ready, and fluent in AI.

45:58That's why so many of the Fortune 500 trust MongoDB with their most critical workloads. Ready to think outside rows and columns? Start building faster at mongodb.com slash build.

46:17All right, we're back. I apologize because we have to talk about another court case. We're going to keep this one short because it's stupid. I feel very confident in saying that this case is stupid.

46:32X, formerly known as Twitter, has filed an antitrust lawsuit against the World Federation of Advertisers. A number of giant advertising X, a platform formerly known as Twitter, has filed an antitrust lawsuit against the World Federation of Advertisers, which is a marketing trade association, and a bunch of big companies like Unilever and Mars, which makes candy bars, for, quote, withholding revenue.

46:59Keith, can you quickly – I can't even get through it. Can you quickly explain what's going on here? Um, X, what's really going on is that X's revenue has collapsed under Elon Musk, um, in North America. I think the times recently reported it's collapsed by more than 50 % year over year. Um, and I think there's a lot of pressure on Linda Iaccarino, the CEO ish of X to find revenue and Elon, uh, hates this trade group. Um, and probably said, we just need to sue them like he did with open AI, et cetera. Um, and it's a trade group. So, you know, it's not the companies that, that spend the money. It's a, it's a thing that it's an entity that is a middleman that helps them decide how to spend the money.

47:46But the idea that any trade group has the ability to keep Unilever from spending on a platform is, shows a fundamental misunderstanding of the advertising ecosystem. Um, well, isn't X also a member? And they are a member and they tweeted that they were proud to be a member last month. So, yeah, Linda Yaccarino posted a very, I'm just going to say. A hostage video. Hostage. She's not a hostage. No, no. She's not a hostage. She's just bad at making videos. Well, it could have been AI. I don't know. The necklace saying mama and then free speech makes me think it wasn't AI. These are all choices she made in her dumb bubble where people think that shit's cool.

48:31there's nothing about her that's a hostage or unwitting like we have she was at code last year we saw her she like she's real she's doing this because she wants to yes i think so i think there's a big part of where people at x this is just from like my sources and kylie's like really feel the fading of their relevance as a company it was really funny like linda held in all hands after filing this lawsuit that our Kylie Robinson was getting info from a source. And when journalists started posting what was happening to this audience, she sat in the audience like, look, this shows that we're important, which I think is just like a sign of the vibe, which is like X is thrashing around trying to be important.

49:20And I think litigation is a very classic Elon way of feeling important. And this is also has like, it has Jim Jordan wrapped up in it. Lauren, I just, this makes me just want to like roll my eyes. Yeah, because he was upset, right? Like he did a thing last year. Yeah, Lauren, can you explain the Republican Congress Jim Jordan aspect of this? Because it's like brain worms, but it's probably important to explain. They are important brain worms. Yeah. Yeah. Oh, well, oh yeah. I forgot that Jim Jordan did send this letter to companies in this group asking about this boycott. And, you know, this is like the kind of thing that Jim Jordan likes to get involved in.

50:07You know, he did a whole thing around the, you know, what he has termed like censorship or collusion between the Biden administration and tech companies. So I think this is, you know, right in that sweet spot of like X being this like free speech platform in his eyes that's being harmed by, you know, this group of other corporate entities. So I think like this is just like right in that kind of wheelhouse. I just want to say something very clearly. Look, I know I went to law school. I'm not saying I'm an expert on every aspect of the law. I just know this one thing. Wait, you went to law school?

50:49What? There's no constitutional duty to spend money on advertising. You don't have to do it. And in fact, most of our speech law depends on the functioning of a market, right? We're like – there's a cliche phrases like the cure for bad speech is a more speech that we use. We're like, oh, we'll just like shovel more into the market and people will make their own choices. And one way you can make choices is by spending money. Famously, our Supreme Court has held that money is speech. Disclosure. That is the holding in Citizens United. Disclosure. The Verge makes money through advertising. Right.

51:27I'm confident we're a part of whatever like GARM initiative. So like big platform companies, it's hard to hold them to account. So it's crazy that Unilever can't roll up to Meta and be like, don't put our ads next to racism. And Meta is like, yeah, I don't know. We'll have another meeting. So they form these trade organizations to be like, hey, together we have enough power in the market to make you build the tools so our ads don't show up next to racism. that's like that is the thing that is happening here and underlying all of this is this and i'll just say it it's like the jim jordan committee and the elon musk and the lindy acarino they're like we should be able to do racism and like you can't you should you should put the money near the racism well no they're mad that you don't they're mad these companies won't do it no there's the yes they want to do that but they also think they deserve money for it and what you're drawing the distinction on is X has every right to operate its platform in the same way that GARM has every right to tell its clients, this is what we think.

52:35And these are the platforms you think we should, we think you should spend on, et cetera. Until we got to this extremely weird point in American history where people are like, what if, what if racism, like what if, what if we did some more racism? This is a, it's a weird moment up until recently, a thing like GARM that was like, we know these platforms are open and anyone can post whatever they want, but we want the advert, like they're very relevant for the advertisers. So we want all the platforms, the advertisers would come together in a committee and have boring meetings and talk about brand safety guidelines.

53:09And then we'll all make money together. Like that is, I don't know if anyone, like probably a lot of our listeners have been to like marketing conventions. Like I've been, I've talked to a lot of advertisers in my time. Like they're the money. they're very boring and safe. Like advertisers do not want to be near a bunch of Nazi stuff. So they're like, we're going to go work with the platforms and we're going to build these guidelines. And Twitter was in it. And what you're finding out now is like Twitter doesn't want to offer those controls. The owner keeps tweeting weird racist stuff, which makes the platform seem not safe and then boosting his own reach.

53:46Like you don't have to spend money next to that. Yeah. And it's, you know, they filed it in this in Texas. We're going to get a favorable judge. I'm sure they're going to get some weird favorable ruling. But eventually you're going to have to contend with the idea that not spending money somehow harms the free speech of racists on Twitter. And like I don't think you can get that far. I think you can force a lot of people to spend a lot of money defending that action. I think you can scare a lot of advertisers the way that people have scared Bud Light, right? You can scare the World Federation of Advertisers, the trade organization, into dissolving GARM, which is two people in a conference room.

54:24And they just – they're done with it now for a while. Their Slack room is closed. You can do a bunch of weird, threatening stuff. But at the end of the day, the thing you are arguing for is platforms should have racism on them and advertisers should be OK putting their ads next to that racism. And if you don't offer those controls, you still have to spend the money. If you don't, it's like a problem. Under this, I would say, under this, notably, Rumble also filed an antitrust lawsuit alleging that GARM had colluded. Yeah, they're trying to get other people to do it. And the only ones who want to do it are the ones who want to do racism and are mad that nobody will fund their racism.

55:00I would just point out that Twitter before all of this was not like Disneyland. Yeah. There was some racism. YouTube makes a lot of money. There's a lot of weird shit on YouTube. Meta, notable provider of Facebook to old people. Weird. Trim Jesus all over Facebook today. Right? Like the money is still flowing in because they're playing the game in the market. And Mark Zuckerberg is like – he might be cozying up to Peter Thiel and saying Donald Trump is a badass. But his public persona is like, I grew up my hair and I'm drinking a beer on a surfboard. We should all make money together. And that's more or less all you need to do.

55:41Not Elon Musk sit at the deal book conference with Andrew Sorkin and tell Bob Iger to go fuck himself and say you can't bribe me with money. And now he's like, wait, you're not spending the money? I'm going to sue you. Exactly. And that's what this is totally about is it's a denial on Elon's part that he has been self-destructive. He has been destructive to X's business and he wants to blame everyone but himself. I think that's ultimately what this comes down to. He's just a litigious bully. He's just like, how can I bully people legally? He's done it plenty of times before. This isn't the first time he's done it.

56:13This is probably just one of the stupidest times he's done it. Okay, so that's like on the top level, it's done, right? You don't have a constitutional duty to spend money. You just don't. Stupid. Then there's the lawsuit itself. And I don't want to pull – it's done. He didn't even get his usual lawyers to file it. He had to go get other lawyers like Quinn Emanuel, his usual law firm, is not – Oh, they aren't? Yeah, yeah. This is like a real rando lawyer. You had to get someone else to do it. In classic Elon Musk fashion, this complaint centers around a contract that doesn't exist. he just loves to find contracts that don't exist so uh you will recall um when he sued open ai it was for a contract that didn't exist he has withdrawn that lawsuit he refiled it in federal court recently and now he's claiming it's fraud there's he took out the contract claims because he realized you can't sue a contract doesn't exist in this case he's saying there's antitrust There's collusion.

57:11And the way he finds it is by inventing an enforceable contract with this ad trade organization. And he has to go find it somewhere. He has to say that it's a contract and it's enforceable. And it doesn't exist. There's no penalty if Unilover spends the money. They might get an angry call from someone, but there's no penalty because there's no contract. So he says the agreement by and among Garam's advertising agency members to enforce brand safety standards is memorialized in a number of places. other than the FAQ and the charter. So if you're like, this contract isn't an FAQ, you're already on your bed.

57:46You're wrong. And you're like looking at other places. And then it says, for example, in new member applications, Garm explains that members must agree to work with industry partners and category peers in a collaborative, non-competitive way. That's the application. There's no contract. So you have this like big collusion and underlying it is nothing. And I'm telling you, this is just there to threaten people. And then there's a devastating, what can only be described as a devastating cell phone. The advertising boycott of Twitter, now X, is contrary to the economic self-interest of the boycotting advertisers.

58:23Due to the boycott of Twitter, prices charged for advertising declined substantially in November 2022 and remain well below those charged by X's closest competitors in social media. By refraining from purchasing advertising on X, boycotting advertisers are foregoing a valuable opportunity to purchase low-priced advertising. This just sounds like an ad for X advertising. Also, that's hilarious. It's also hilarious that Linda posted this video on X where the advertisers she's trying to talk to are not there. They're purposely not there. She was there saying it's your voices, right? He was calling on the users to effectively attack all of these folks.

59:07So there's like – And that's like the Bud Light moment, right? Like we're mad at Unilever. Go, weirdos. And like I personally think there's a lot – on the other side of this lawsuit is a lot of powerful advertising money. And they're going to say, actually, we don't think your platform is brand safe. And it is – our money is our speech and we can do whatever we want. And there's no contract here saying we can't do these things. There's a trade organization that we rely on so that we all act in a collective way to prevent the monetization of racism. And that's fine. And it's really hard to gin up a lot of outreach over that.

59:43It's a really strange concept that, you know, it's like Linda is asking users to be mad that they're not getting advertisements from specific companies. Like, I don't think anyone's ever been mad to not get that. You need to be curious. The Charmin bear is not in your feed, right? now is what she's saying. It's just goofy. It's also funny that they've gone ex-premium. They're now advertising it has no ads. It's because you don't have any ads. Alex, how much longer do you think this iteration of X has to go? To be clear, it is popping off during the election. In the election year, there's a lot of activity on the platform.

1:00:26There's a lot of people coming to threads because Elon keeps posting insane nonsense, but it's still vibrant in its way. Is it going to be able to sustain itself over time? I think it's very hard for a platform with this level of scale and network effects in social media to just die quickly. I think it's like we're talking like, or Elon pulls the plug, right? Elon could have an episode and decide to fully pull the plug or sell it for parts. But barring that, I think it continues to live on. It dwindles in influence. If I had to guess, their percentage of users who are regularly posting has gone way down based on just scanning it.

1:01:09My feed is just a lot of the same accounts now. It's just less interesting, less varied. But it still has that twitchiness. Oddly, in the tech community, the AI world especially, it's just still where everyone is and hanging out. And like the open eye, the open eye people are like, they're just feeding training data to Grok every day. It kind of blows my mind. But so, yeah, Threads doesn't quite have that kind of real time juice. And it's like, yeah, it just it's missing. that still. He's going to tell us about the lawsuit next week. Don't worry. Yeah, exactly. Yeah, we'll find out about it last week or next week.

1:01:50I think, you know, he's betting big on payments. I think we're going to see that relatively soon, this whole banking play, where you can exchange value with other Nazi supporters on the platform. I mean, I don't know what that's, you know, he's, I think they're building that stack from scratch. I would hope so, because I could imagine Stripe turning that off after a while when you realize, like, what's happening with that. But yeah, it's kind of just turning into this like, it's a reflection of Elon. It's a reflection of his psyche. It reminds me a lot of like Rupert Murdoch and Fox. And especially how he's using it in this election cycle.

1:02:28It's in stark contrast to Meta and Zuckerberg. Yes, you've got Zuckerberg on the edges with the Trump stuff. But Meta is like, we're out of politics. We're not recommending it even. Right. And so it's just very different. I think Fox is – Murdoch is successful with Fox. Fox is like the most successful news network. And he's really good at it. But Elon's not. Well, I think X will start to look more like that. I think it becomes his media empire. I mean it's already become that, right? It's already become his place where he can go and spout the most transphobic racist stuff imaginable and get yelled at and then sue people because they don't want to advertise next to that transphobic racist shit.

1:03:11It's just very free speech. Absolutely. And that's the thing. Like he said, we need the internet needs its digital town square. And that's what X was going to be. And it turns out like no one wants to be hanging out with a bunch of people yelling crazy, insulting, vile stuff. It turns out digital Times Square sucks. Yeah. Times Square is like you never want to be there unless you're a tourist and you got conned into a guide thing there. So, like, yeah, I feel like it's just reflecting him more and more. And that's going to make it smaller, but it will live on. I think it stokes his ego. And I think he likes having a platform that has a media element to it that also feeds his other businesses.

1:03:53Which gets acquired by the other one first, true social or X? I just summoned that. I'm sorry. I feel like after – we've got to wrap this up. We've got a whole lightning round. But I feel like that is like a supernova of garbage. that after this election, we will see, right? Those things will collide into each other after this election. But yeah, there's just a, there's a moment happening here where it feels like whatever platform, we've talked about this so much on the show, whatever platform era we're in with big search in Google, with Twitter dominating public discourse, with Instagram being where all the influencers are, like all of that is just sort of winding down.

1:04:33Like people are tired of a lot of it and like, we'll see what happens next, but you can feel it like oh a bunch of stuff that we took for granted is changing and one of them in particular is the dominance of Twitter in the conversation because he's just tearing it to shreds. I will end by reminding everyone you do not have a constitutional duty to buy advertising. I don't like it's not you know like I don't know if I can make this argument to Clarence Thomas like George Washington never said that out loud. You know it's like Except if you have a lightning pun with your business and you are going to sponsor the lightning round then you have a constitutional duty.

1:05:07Only reason, only reason. Yeah, that's true. George Washington did say that. All right, we got to take a break. We'll be right back with Lightning Round.

1:05:17Sometimes the difference between success and failure comes down to one chance encounter or following a counterintuitive instinct or ignoring conventional wisdom to make a bold decision. Like when the founders at Palo Alto Networks wanted to redefine cybersecurity for the modern age. Everybody thought we were crazy. Nobody would use the cloud for cybersecurity. Or when mobile gaming giant Supercell could only rewrite the rules of the industry after failure in the company's formative stages. Many of the best things we've learned have actually come through failures. These are all examples of crucible moments, turning points in a company's journey that made them what they are today.

1:05:59Hosted by Sequoia Capital's Rolla Foto, Crucible Moments is back for a new season with stories from Zipline, Stripe, Palo Alto Networks, Supercell, and more. Subscribe to season three of Crucible Moments. New episodes are out now and you can catch up on seasons one and two at cruciblemoments.com on YouTube or wherever you get your podcasts. Listen to Crucible Moments today.

1:06:30All right, we're back. And it's true that the lightning round is once again unsponsored. And I believe most of our founding fathers should be disappointed in you. We're talking to lawyers right now. Yeah. The lawsuits are coming, folks. We're going to sue every Vergecast listener for not sponsoring the lightning round. This is good. There's just like a lot in lightning round. Kranz, let's just start with Disney real quick because all that's really happening here is they figured out that the way that you make money in streaming is by raising prices. They did. Yeah. Disney is doing fine. They figured out that it does cost money to put content out on the internet and that in order to get that money back, you have to increase prices.

1:07:10And they're also, for some reason, kind of copying Peacock and Paramount, even though they are famously not very as popular, by adding in like ABC News is now going to be live. You'll be able to watch ABC just on Disney+. And I'm like, that's really smart. I'm really excited about that as someone who doesn't pay for cable. But, yeah, Disney's just jacking the prices up. And it's going to keep happening. I'm sorry, folks. And they're cracking down on password sharing in September. So they've just figured it out. They're like, we're going to charge everyone a lot of money. Yeah. Like everybody knows exactly what to do, which is make everybody pay you a lot of money for things, which is what they were all doing before streaming.

1:07:50And they're just like, oh, my God, what if we did what we did with cable? It turns out there is a constitutional duty to pay a lot of money for Disney. Yeah. That's just baked into the fabric of America. I still wait with bated breath for the lawsuit or the antitrust suit against Disney for just buying all of pop culture and owning all of it except for, like, Taylor Swift. Hey, I'm going to go see the Wolverine movie tomorrow. We're close to spoilers already. I don't want to spoil it. I don't want to spoil it. But it is the entire Disney oeuvre is, like, in that movie. All right. So that's Disney.

1:08:28Lauren, what's your lightning round? Yeah, so I've got Microsoft and Delta just going at each other for, you know, who was the issue with Delta having to cancel a bunch of flights after the crowd strike issue. And this whole story is basically the Spider-Man meme. They're just pointing at each other. And it seems like maybe Delta CEO missed an email from Satya Nadella offering help. and so it's just a lot of really mundane things like missing emails except that well delta wi-fi does suck so i'm not it's really bad i'm not surprised that he missed an email he's probably on one of his planes yeah delta wi-fi is horrible lately yeah yeah yeah actually it seemed like maybe the ceo was like flying to the olympics um so yeah it definitely could be it could be the Delta Wi-Fi.

1:09:24So CrowdStrike went down. Delta went down catastrophically. And then Ed Bastian, who's the CEO of Delta, was on CNBC and he said when it was the last time he heard of the big outage at Apple, which apparently just made everyone mad. Like everyone except for Apple. I think Apple was thrilled to hear that. And so Microsoft sent this letter and they're like, our software didn't cause your problem. CrowdStrike did. And CrowdStrike is kind of like don't, can you guys fight. It's all very good. And they keep saying they've been offering to help Delta. Delta apparently had it worse. Other airlines came back faster.

1:10:00Yeah, Delta was days later. They were canceling they just canceled their unaccompanied minor program during all of this. They were like, yeah, minors, you just don't travel anymore. And so kids were stranded in random airports and stuff. They shit the bed and are looking for someone to blame. Yeah, so Microsoft is saying Delta has apparently not modernized its IT infrastructure. And that said, it's rapidly becoming apparent that Delta likely refused Microsoft's help because the IT system that was having most trouble storing crew tracking and scheduling was being serviced by other providers such as IBMs.

1:10:36And it's like, I've never seen an IT vendor look at a client and be like, no. No, absolutely not. Well, wasn't Southwest not impacted because they were still running on such an old version of Windows. No, that's a meme. That's right up there with J.D. Vance on the couch. It's like it's so good you don't want to check it. Wait, J.D. Vance on the couch isn't real? Damn it. It's like there's a long list of too good to check, and Southwest wasn't affected because it's running on Windows 3. It's like right up there. You just ruined my week. I'm sorry. That's fine. Southwest is great. All right, Alex, what's yours?

1:11:11Heath, what's your lightning round? Yeah, so mine is a great scoop that Kylie had on the site about Humane, a company that we obviously have been obsessively chronicling since the disastrous debut of its AI pin. She found out based on some internal sales data that she got that more pins are being returned than sold. It's very good. Which I'm not running a hardware business, but I think that's bad. And the piece is great. She's got a lot of color. I just want to call out Humane spokesperson Zoe Kukias' statement to us, where she said, we do not comment on financial data, but we'll refer it to our legal counsel.

1:11:56And it's just ridiculous. It's a ridiculous response to a story like this. But Humane is very much on the defensive. There's talks, rumors of them trying to sell themselves to HP. they raised over$200 million and sold$9 million worth of product-ish. So not good for them. If you do the math at$9 million, whatever, the pin was$700. So they sold like 12 ,000 units. They wanted to sell 100 ,000 in the first year. So they sold like 12 ,000, and I think Kylie has it. There's only 7 ,000 left in the wild. That's bad. That's just generally bad. If you have one, you should save it and put it in a box. It's going to be a great – honestly, it'll be a great collector's item.

1:12:35If you have one and haven't returned it and actually use it, just hit me up. I want to know everything about you. I want to understand your world. Someone right now is touching their pen and being like, email Alex. Alex. Email Alex. Nope, no, the pen's on fire. Oh, that was the other thing, Kyle's piece, which I think is one of the worst pieces of the puzzle. They haven't figured out how to refurbish the pens. Yeah. Because some limitation on T-Mobile, which I'm guessing is related to reprovisioning the eSIM inside the pin. So they're just stuck with this and they hope they can figure it out. Just bad all around.

1:13:13I will say to Heath's point, once you start waving lawyers at me, I've learned something about you. Yeah, yeah. Yeah. I'm not going to say that. It's the ultimate tell. It's the ultimate tell. It's like, oh, I know something. And we do this a lot. people have a lot of lawyers have emailed me the verge still exists that's almost we're uh we're better at it than you might think uh all right i'm gonna talk can i can i quickly talk about the tv competition tell us every story that i didn't write a thing that no one knows that i did um there's a very famous tv store in westchester new york called value electronics they've been doing it forever they sell a million tvs robert zahn the guy who owns it he runs it of this family.

1:13:58It's just a little mom and pop. And they sell more high-end TVs than anyone. Like, Sony allocates high-end TVs to this one store. And so every year they run, and he's a former broadcast engineer, so every year they run this thing called the TV Shootout. They've been doing it for 20 years. And literally, the CEO of compression houses and the head colorist for movie studios, a Warner Brothers Discovery encoding person, they're the judges. They have master calibrators come and calibrate all these TVs. And then there was me, because I'm a consumer reviewer. Which is great. So I was honored to do this.

1:14:34I felt completely out of my depth. I think my scores were in line with everyone else. And I will write this up over the weekend. But I will say, one, my TV, the one I bought, the Sony A95, it won. Yay! Congratulations! That was the winner. And then the mini LED TVs, I think I said micro LED earlier, but the mini LED TVs, the new Bravia 9, there was a Samsung one there's an LG one they're not even in the running yet you can just obviously tell like they're gonna get there but there's so much more to go on the mini led side before they compete with the OLEDs the OLEDs were just like it was like a sigh of relief going and looking at the LEDs after the mini LEDs so I will write all this up but it was fascinating to be a judge in a TV picture quality like first of all I was in heaven like pure heaven just joy for two days I did nothing but look at TVs with other TV nerds and talk about things like posterization in like fields of color.

1:15:32Did people, who brought the like colorimeter? Did anybody bust it out? So that we were, I gotta write about this, but we were judging the TV. It wasn't a subjective evaluation. They had$40 ,000 Sony reference monitors by each bank of three TVs. Oh my God. And the judging was how much the TVs were deviation, how big of a deviation from the reference monitor those TVs were. Oh, so of course the Sony one. Right, because it was a Sony reference monitor. I was like, does the Sony look like its own Sony reference monitor? But the reference monitors were like, this is what the mastering people wanted the movie to look like or wanted the content to look like.

1:16:13And then if you calibrate the TVs, how closely can you calibrate the TV to the reference? This is what I want. So it's not like a what looks better, totally subjective thing. It was how close is this to the reference, which made it like a very different kind of exercise. And then obviously everyone's like a huge nerd. Like people were up there like staring at pixels and like intently. And we had to be reminded the judges were like, you can't collude. I was like purely in heaven. No antitrust here. For two days over a weekend. How many times did you have to watch Harry Potter? Or Avatar. Oh, man.

1:16:48So we watched a movie called Dr. Sleep several times, which is insane. So you had to find things. We were judging things like low light performance or fast SDR motion or bright HDR sports. So they had to find clips to play. All of the clips were being run off an Oppo Blu-ray player. I'm so happy. Or off a Kaleidoscape, which is really high bitrate streaming. So there were all these specific clips that were there to show specific things we were to judge. And I had like 60 numbers per sheet. And there were like four sheets of scores. And it was a 10-point scale. And I was like, world of no sevens.

1:17:34Like the whole thing. It was great. You can go look at the press release. You can see the scores. The Sony won. The LG G4 came in second, more or less. And the Samsung came in third in the OLEDs, and then the Sony Mini-Ni-O-D came in first in the Mini-Ni-O-Ds. The scores are public. I'm not revealing anything. You can just go look at that press release. I will write up the whole thing because there's more to say. But I have to say, I thought I was going to spend this week arguing about TV stuff with people, and I super didn't. I was very much distracted by other stuff. But I had the time in my life.

1:18:06It was really fun to be a judge. I hope I get to do it again next year. and yeah I'm like and the interesting thing is that the headroom for those mini LEDs to get as good as OLEDs is obvious but it's nowhere close like not even in the same ballpark Was it the brightness and just like that difference in the range? No it's like I mean they're LCD TVs so they're still like washed out the colors are all wrong like the LCDs are all pinker than the OLEDs it's like bananas I will post up my scores, like my score sheets. I was like, Neil, I just want you to file this story. I just really want to read this story.

1:18:43That's what I thought I was going to do this weekend. I had to read PDFs all day long. Please no one else release a major lawsuit. I started in this whole career to not be a lawyer and to look at TVs all day long. No more lawsuits. We're done for the week. Also, justice for the frame TV. I'm really sad. The frame TV was not even in the picture. Like, I brought up the frame TV with a bunch of people. Oh, the manufacturers all had representatives there. So I met a bunch of very nice Sony engineers and product managers and all the companies were there. And I kept asking, do you think the Frame TV is a harbinger of doom?

1:19:13And they'd be like, no, no comment. Who are you? Do you have a professional color calibrator? Well, we got more of them now. There's competition for the Frame TV from, who is it? It's TCL and Hisense. So like a race to the bottom on TV quality there. No disrespect. It's a real something. TCL and Hisense, by the way, opted out of the competition. They declined to participate, which is pretty good. All right, Kranz, what's your lightning round? All right, so my lightning round is Chromecast is dead, but Chromecast is not dead. Just the dongle is dead. I saw there was some confusion out there in the world.

1:19:52Chromecast is like the protocol that you can go and cast things to your TV or whatever. That still lives. The little dongles are gone. They're done. It's all over. They're all over. The picture we have in our Chromecast is gone. There's a picture I took of the first generation Chromecast in 2013, plugged into my Pioneer Kuro. And in the background, you can see my three component cables plugged into it because it was 10 years ago. Component ruled. I'm pretty sure my cable box is plugged in with RCA cables via component. It's very good. It's very good. It's kind of Google's whole idea with the Chromecast was you're just going to use your phone to watch video and send it to a TV.

1:20:32And we all realized that sucked. Yeah, it didn't work. And then the TVs all have the software in it. And the new streamer box, Alex, I'm very curious for your perspective on this. They told Chris Welch that their North Star, what they were competing with, is the NVIDIA Shield. Yeah. Look, we love to rip on the NVIDIA Shield. I personally still use the Apple TV myself. But the NVIDIA Shield is the most powerful laptop box. It is the highest quality. It is the one that, like, if they had been using a streaming box at the shootout Neelai went to, that's what they would have been using. They use Apple TV.

1:21:06I just want to be clear about that. But Apple TV is, that's the one that installers all like to use because that's what the clients more prefer. Yes. So those are the two. So, like, chasing the NVIDIA Shield is awesome. The NVIDIA Shield could probably do to chase itself a little because I don't think it's had an update in, like, two years. But it's, like, it also is, like. I think NVIDIA has different priorities now. Yeah, right now they're like, we're just going to generate buckets of money with AI. We don't care about these little... If we ever interview Jensen Wang in Decoder, I'm going to be like...

1:21:35Jensen Wang. If we ever interview Jensen Wang in Decoder, I'm going to be like, AI, whatever. Tell me about your plans for the NVIDIA shoot. And then we're going to see if he even knows it exists. He's just going to be like, pocket sand, throw it at you and disappear out of France. Just absolutely not. You're going to run away. Oh, Alex, I got to tell you. one of the tests we did at the TV shootout was an ATSC 3.0. We watched the Olympics broadcast from NBC New York in 1080p HDR to something called the Zapper Box, like a tuner box with Atmos audio. It was like barely compressed because it was just full quality broadcast.

1:22:10It looked incredible. Yeah. I was like, I got to get an antenna. And I was like, no, I don't. You don't even. I truly do not have to get an antenna. That's the only station, and you won't get any joy out of it once the Olympics are over. There was a very funny miscommunication moment where I was like, where is this coming from? And someone very earnestly was like, it's in Paris. I was like, no, that's not what I meant at all. Bonjour. I was like, no, I'm at what station. It's fine. Whatever. It was very good. All right. We are way over. I'm sorry that we talked about Elon Musk, but he's not good at knowing what a contract is.

1:22:46I'm just telling you that's the truth. Lauren, Heath, thanks so much for joining us. This was great. Thanks for having us. Thanks. I think David Pierce is back next week. We'll see if the show gets back. We'll see if the show gets back on the rails. It won't. We're going to be too busy suing each other. All right. That's it. That's our chest. Bye.

1:23:12And that's it for the Vergecast this week. Hey, we'd love to hear from you. give us a call at 866-VERGE-11. The Vergecast is a production of The Verge and Vox Media Podcast Network. Our show is produced by Andrew Marino and Liam James. That's it. We'll see you next week.

1:23:30They say an apple a day keeps the doctor away. Well, why not make it a limited edition Grooney Smith Apple Vitamin Snack Pack from Groons? This isn't a multivitamin, a greens gummy, or a prebiotic. It's all of those things and then some. And bonus, it tastes great. All Gruen's Daily Gummy Snack Packs are vegan, not gluten-dairy-free, and packed with more than 20 vitamins and minerals. Grab your limited-edition Gruenysmith Apple Gruens available only through October. Stock up, because they will sell out. Get up to 52 % off when you go to gruns.co and use the code VOX.